What is gross profit?

Gross profit is defined as the difference between the sales revenue generated from selling products and the cost of goods sold (COGS), which includes the direct costs attributable to the production of the goods sold in a company. This measure reflects the profitability of a company's core activities, excluding overhead and other operating expenses.

In this context, the correct answer is rooted in the fundamental formula of gross profit:

Gross Profit = Total Sales Revenue - Cost of Goods Sold.

This calculation allows businesses to assess how efficiently they are generating profit from their products before accounting for other operating expenses, taxes, and interest. Understanding gross profit is crucial for evaluating the financial health of a business and its pricing strategies.

The other options describe different financial metrics but do not correctly define gross profit. For instance, total sales revenue refers to all income generated from sales without considering costs, while net revenue after taxes represents the profit after all expenses and taxes have been deducted. Cost of goods sold minus expenses does not accurately convey the definition of gross profit as it overlooks key elements in the calculation.